Thinking about starting a restaurant loyalty program, but haven’t made a final decision about it? Now is the time to make a move. Here are the four important reasons why you should offer a restaurant loyalty program to your customers:
1. Capitalize on Consumer Demand
According to a recent study by Technomic, participation in loyalty programs is on an upswing, with 48 percent of consumers taking advantage of more restaurant rewards programs today than they did two years ago. And a survey by the National Restaurant Association revealed that all other things being equal, 57 percent of adult consumers are more likely to patronize an establishment with a restaurant loyalty program than to spend their dining dollars at a restaurant that doesn’t offer this option. So a restaurant loyalty program not only satisfies a growing customer demand – it gives you a competitive edge.
2. Increase Traffic and Sales During Otherwise Slow Times
Every restaurant has less-than-busy periods, but a restaurant loyalty program minimizes the negative effects by filling otherwise empty tables and encouraging customers to spend more money during their visit. Using a combination of what you’ve observed about your restaurant and data from your point of sale (POS) system, determine which hours, days, or seasons of the year your business is slow. Then, create special offers to coincide with these times, leveraging the email marketing component of your restaurant loyalty program to do so. If your restaurant loyalty program integrates with social networks, such as Facebook, use those platforms to get the word out, too.
3. Loyalty Program Encourage Repeat Visits
In the same vein as an increase in sales, a loyalty program can turn an occasional patron into a frequent diner. When he/she gets the coupons right on their phone, thoughts of other places to eat will be pushed from their mind, and your restaurant will be pulled to the forefront. American consumers are especially obsessed with the idea of value, and when you make it valuable for a consumer to return to your establishment, they are much more likely to do so.
Even the perception of greater value over another restaurant will create the incentive to choose your restaurant over a competitor. Repeat customers are the lifeblood of most businesses. Making and keeping consumers happy through a loyalty program that rewards them for their continued business is a great way to achieve this.
4. Build Loyalty and Engage with Customers by Celebrating Special Events
Seventy percent of consumers celebrate their birthdays at restaurants, according to the National Restaurant Association. With a restaurant loyalty program in place, the chance that customers will select your establishment for their special celebration increases many-fold. Simply ask for the date and month of customers’ birthdays when they enroll in your restaurant loyalty program, and send them an offer a few weeks before the big day. Of course, as few individuals dine out alone on their birthdays, a birthday offer can yield big returns in check size (and even bring you new customers from the birthday celebrant’s group).
Other milestones—e.g., customers’ wedding anniversaries, the anniversary of joining the loyalty program, the first or last day of school in your town, etc. —are also easily celebrated using a restaurant loyalty program. The more you leverage the program this way, the higher the degree of customer loyalty, and the more customers will want to engage with your restaurant brand.
From satisfying customer demand, to increasing sales and visit frequency, to engaging customers, a restaurant loyalty program can benefit your business in multiple ways. The above mentioned reasons for introducing such a program are only the beginning.
A survey conducted by the National Restaurant Association (USA), shows most successful restaurants are able to flourish due to the a loyal customer base, with regular customers making up 71 percent of sales at QSRs, 68 percent of sales at fast-casual operations, 64 percent at casual-dining establishments, 63 percent at family-dining eateries and 51 percent at fine-dining restaurants. There is only one reason for a regular customer – satisfaction.
There are basically three types of customers for a restaurant. The first type are customers that come in once or twice, but never again. The second type are customers that come in every now and then, but not often at all. The third type are regulars. These are the people that your staff recognizes because they come in often enough to make an impression. Regulars are more important to a restaurant’s success because the more regulars you have, the more likely it is that you are doing something right.
The question is, how do you convert customers in the first two groups to customers in the third group?
As per various surveys the following parameters are which influence the customer to be loyal
1. Food quality
2. Menu selection
3. Menu pricing and value satisfaction
4. Waiting times
5. Promptness of service
6. Professionalism and friendliness of server(s)
7. Server’s knowledge of menu
8. Ambiance and feel
9. Restaurant location
10. Overall restaurant experience
11. Special treatment for repeat customers (loyalty programs, custom offers)
12. Queue management
Home deliveries and take aways typically have some additional parameters such as ease of placing the order, packaging and promptness of delivery. Surprisingly, discounts maybe good to attract new customers, but not to retain them – retention solely depends on the customer satisfaction. Along with good food and great service, it is also important to make repeat customers feel privileged. For example Dumaadum, a Pune based QSR chain, saw an increase of 25% in the number of repeat customer orders and visits after introducing the loyalty program and running targeted campaigns for NRO (not recently ordered) customers.
“Restaurant operators today are much savvier about attracting repeat customers and maintaining their loyalty,” said Hudson Riehle, senior vice president of the NRA’s Research & Knowledge Group. “They are utilizing new technologies and tactics to engage, retain and enlarge a loyal customer base.”
To achieve customer satisfaction, apart from the organic ways, there are other ways to enable a restaurant to increase customer retention:
1. Reward/Loyalty Programs
2. Targeted & personalized customer campaigns
3. Regular feedback and corrective actions wherever necessary
A lot of restaurateurs enable feedback mechanism, but the question is – how many take corrective actions based on the feedback? It is important to acknowledge positive and especially negative feedbacks. For positive feedback a simple SMS thanking the customer can do wonders whereas for negative feedbacks it is important to notify the customer what corrective steps have been taken. Just the fact that the restaurant has taken the customer feedback seriously, makes the customer feel valued. If the restaurant is truly at fault, the customer can even be offered a coupon or a discount to make up for it.
The most important thing is to ensure that a customer is not lost. Most restaurants spend much more effort and funds on getting new customers rather than retaining existing ones – there needs to be a balance of both. The last thing a loyal customer wants to hear is of offers available only for ‘new’ customers!
While many restaurateurs have made loyalty programs a part of their marketing strategy, many are still on the fence for initiating one. Loyalty programs have proven to be extremely successful for many types of businesses such as retail, restaurant, travel, entertainment, banking, etc. However, the Food&Beverage industry can witness its benefits in a more obvious way.
Loyalty Program Benefits :
Loyalty programs are not expensive to initiate or maintain, unlike what most marketers believe. They, in actuality, boost growth and turn out to be much cheaper than getting new customers. By acquiring returning customers or those who are likely to repurchase, and by understanding the limits of those who wish to repurchase but don’t, a loyalty program can become a bridge between the two. A successful loyalty program also helps you win back upset and disappointed customers.
Another advantage of having a loyalty program is that you can turn your guests into your brand advocates. A referral system intertwined with a loyalty reward program can work wonders in acquiring new customers. It also helps you reduce your advertising and marketing costs since the customer database provides all the information needs to connect directly with them and thereby keep all the tables occupied. The CRM system can be integrated with your restaurant management software to capitalise on your loyalty program. This can make the customer experience better by you knowing their personal contact details, order history, preferences, expenditure, etc. As a result, you can segment your customers on the basis of high and low paying guests and service them accordingly.
The biggest benefit of running loyalty programs is creating long-term relationships with your customers. This personal relationship manifests itself in birthday / anniversary discounts, corporate discounts, priority reservations, express deliveries, reward system, etc. Therefore, a loyalty program witnesses a shift from a one sided communication of bombardment of invites and coupons to random customers, to an interactive relationship between your restaurant and guests you regard as valuable.